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I feel that we talk obsessively that the problem in politics is at the extremes, far right, far left. I think the problem is actually in the center.
Welcome back to voter Nomics, where politics and markets collide. This year, voters around the world have the ability to affect markets, countries and economies like never before, so we've created this series to help you make sense of it all.
I'm alegro Stratton and I'm Adrian Woodridge.
In a week of difficulties for political leaders around the world. I Love Schultz in Germany just about clinging on in an important election, Prime Minister Michelle Barnier in France in power but struggling to see how he will get his agenda through the French Parliament. And in the UK, Keir Starmer hit by a scandal around free gifts that pretty much nobody saw coming. We're going to talk more to the gentleman you heard at the top of the podcast.
Michael Ignatief was the leader of Canada's Liberal Party from twenty or six to twenty eleven. He led his party to an historic defeat. More of that interview later, but first of all, we're heading into the final stretch of this year of elections, aren't we, Adrian and I think actually the realities even for some of those elections which have been and gone and we have conclusive results like the one in the UK, it is not plain sailing
for those new governments. It's quite a startling turnaround, isn't it.
It's quite extraordinary. We have the Labor Body conference it order to be a great celebration. You know, Labor has just come back to power with a massive majority of the tours have collapsed. They have i think the goodwill of most people in the country, and yet it's a pretty miserable atmosphere reading between the lines, partly because of this extraordinary scandal over accepting gifts that Starmer has got itself involved in, partly because of his sort of miserablest
a gender. He's talked constantly about how bad things are and now they're trying to change it a bit, but in a very performative way. But the problems of this country are really very deep and it's going to take a long time to fix them. It's difficult for you know, what are essentially centrist politicians to come back into power and you know, righte onto victory.
But Sir Adrian, I'm interested in your take on the free clothes, get tickets, spectacles, uh, personal shoppers. Froth Or says something deeper.
You only get one chance to make a first impression, and their first impression has not been good. And they've also acted in you know, hypocrisy is the greatest of all sins in the democracy, and they've been hypocritical. They lacerated the Tories for corruption, for party gates and all the rest of it. They come in to pow and they do what most people consider as be very similar things.
When Rachel Reeves made her speech to conference, the backdrop was something we called it read out the booming gloom. You know, it's gone too far, And as you say, they all were sort of instructed to go out and course correct and be less gloomy. And one of the nuggets in her speech was this idea that you know, the investment is the answer, and that maybe even the government treasury rules might be looked at in order to
allow borrowing to invest. So I think they're trying to say to their supporters, are who are immensely grumpy that they've had to go out and defend these free clothes, which they don't think are defensible. They've contorted themselves into all sorts of weird arguments in order to make the case, which they're not comfortable with. So they're having to say to their own followers, look, you know, there is a
point to this labor government after all. Just just wait until the budget, which is six weeks away.
Yeah.
The problem is that they sort of have this mentality of basically saying, invest in Britain, We're a basket case. I mean, they've spent so long saying how awful things are and how many deep structural problems Britain has, which it does that it's also now very difficult to get foreign investors to come here and invest. Also, a lot of the solutions to the shortage of money, for example, such as public private partnerships, which I think they will
revive in some sort of way. In the past they've demonized and said is a terrible set of ideas.
Adrian looking further afield France, you know, the kissed armor could take some comfort from thinking he's you know, he's not alone looking across to France, where Michelle Barnier has become Prime Minister, but it is still not clear how he can get through Parliament what he'd like to get through. And then Olas Schultz in Germany just about clung on in an election at the weekend, but it was a
very very close wrung thing. So, as is the theme of this podcast, the travails of world leaders continue.
Oh absolutely, Barnier is trapped in a really paralyzed political system, and Schultz, I mean, the way the only way he sort of survived I think in this election was not appearing himself, you know, he sort of he sort of disappeared. He hid himself during the election campaign because he's so so unpopular. He's a drag on the ticket. But I think there's something bigger here that's going on, not just
France and not just Germany, Europe as a project. I read that the Draggy Report on European economic performance, and not only is it incredibly depressing, but the one solution that Draggy seems to think we need to have, which is much more centralized investment in high tech and the rest of it, seems to be something that we can't do. So it's hard to see the great phrase the light at the end of the tunnel, which Kisamoril and doubtedly
use in his speech today. It's hard to see any light at the end of the tunnel for the whole of the European continents, so not good news for anybody at the moment.
Didn't somebody want to say that the lights from the end of the tunnel is an oncoming train.
Be careful of those lights at the end of the probably.
Okay, Now let's get to our main conversation of the podcast. We're joined by former politician and professor in the history department of the Central European University in Budapest, where he was also president for five years, Michael Ignatief. Michael led Canada's Liberal Party and official opposition from twenty ozh six until he lost his seat in the twenty eleven election. That elections saw his party win the fewest seats in its history and be reduced to third party status for
the first time ever. Now, Michael, we often have analysts and academics and writers on this podcast, but we don't frequently have politicians or people like yourself who've actually been on the front line. Before we get onto sort of high minded questions of voted discontent and so on. Just talk to us about you know, just for me reading out those sentences, fewer seats in history and so on. Is it still painful?
Oh? Sure, sure, you don't go into Pola digs unless you think you got a pretty good chance of winning. And the Liberal Party of Canada was like to think of itself as the adults in the room, the natural governing party of the country. I think we failed to respond to the two thousand and eight financial crisis. I think we failed to understand just how radically destabilizing that had been to everybody's expectations and how destructive it was
to their confidence in the center of Canadian politics. And so I ran as a centrist, moderate gradualist of a kind that we'd known for many years, and it didn't fit the sense of radical destabilization and uncertainty that hit the Canadian public in two thousand and eight and two thousand and nine. So we got clobbered, and to go back to where we started it's a very very difficult
experience to get over. I've had a fantastic time since politics, and I'm all fine and don't cry for me, Argentina, but it wasn't easy.
I'm can I ask you a little bit about the destabilization. I just wonder there was a sort of formula that liberalism reached, which was economic liberalism to social liberalism, and that did brilliantly in the nineteen nineties under Blair and Clinton. But are we seeing that formula falling apart everything like immigration and public health and all sorts of areas. Do we need a new formulation of liberalism to deal with the fallout of the economic of the financial crisis and more.
Andrew, I think there's something to that. I feel that we talk obsessively that the problem in politics is at the extremes, far right, far left. I think the problem is actually in the center. I'm a liberal, proud liberal, but I think we didn't listen at all to the white working class that in my childhood was in unions, was organized, felt intense pride in the work they were doing, and then lost income, lost status. From the early nineteen
seventies onwards. We didn't listen or pay attention to the staggering increase in inequality that began to set in after the oil crisis of the seventies, and so instead we focused this is the more controversial part on a revolution and inclusion, which men embracing a multicultural society, embracing the
consequences of feminism, bringing racial minorities into the center. I'm in the universities now, and we've enormously promoted the entry of recent immigrants, minority groups, women into the heights of higher education, preaching the doctrine of equality of opportunity. But the equality we delivered were for those groups and not for the white majority, and I think that's triggered an
enormous backlash and it's threatening the center of politics. Let me be clear, I am a passionate believer in the revolution of inclusion. It's been the best thing that liberalism did since nineteen sixty. But I think we neglected to realize how disruptive it was to the subtle expectations of the white majority, and that now has left our politics open to politics of revenge, of politics of resentment, which simply has to be dealt with. These are good citizens,
they need to be listened to. We need to think this through, but without I woult to want to emphasize walking back on the inclusion that I think has done so much good to society.
Michael, what would you do differently?
Boy? That's such a good question and so difficult. I think, first of all, we'd simply acknowledge that this is a problem. Instead of acknowledging that it was a problem. We condemned white working class voters as racist or sexist when we weren't addressing the politics of feeling disempowered, excluded, and not listened to. There are racists out there, there are sexists
out there. But we adopted a kind of conviction that our moral belief in a multicultural, feminist, inclusive society was such a self evident good that it didn't need to be politically defended. And I think we lectured people instead
of listening to people. That's kind of number one. Number two, since immigration has become the ferocious source of discontent across Europe, we didn't manage something basic, which is a have a regular legal immigration stream that is, welcome immigrants through a legal channel, and secondly, have an extremely tough repatriation strategy for illegals. The thing that is devastating the fragile consensus on immigration is a sense that the country's borders are
not secure. Is a problem in the United States, it's
become a problem in Canada. It's a problem in every European state, and until we re establish the legitimacy of national borders and the credibility of immigration control, we can't sustain what I firmly believe in as the son of immigrants, a regular, lawful immigration stream that compensates for our declining birth rate, fills the jobs that need to be filled, and creates avenue of opportunity for the fantastic people who's so enrich for example, Britain, Canada, every society.
I mean, we're talking about twenty eleven when you left power. We're now in twenty twenty four. This is thirteen years where the dynamics don't seem to be hugely different from the ones you're describing as getting wrong in twenty eleven. Have you been surprised to watch things over the last thirteen years not change and possibly get even worse than successive governments not dealing with them.
I think I am surprised. I think you've got a good point there. I think what's staring us in the face is a capacity problem as well. I'm struck by the fact that we have so much difficulty controlling borders. I mean, in Italy, I get it, it's got such a huge literal and it's exposed into the Mediterranean. But I am a bit surprised that two powerful nation states, Britain and France cannot control these boats. I simply don't
understand it. And then the solutions that are proposed flying everybody to Rwanda are so ridiculous that you can't imagine that they aren't laughed off the table of British politics. So there is something very odd about what's going on. And I think it's corroding not just support for migration, it's corroding support for the liberal democratic state. If you can't control your borders, you're failing the primary obligation of any state, liberal or otherwise.
But I wonder if there's a sort of strange paradox here that if liberals, if centrists, fail to deliver policies that can be judge in a practical way improving people's living standards, they get punished, But if populists fail to deliver practical solutions to problems, they get rewarded, in the sense that people ask the more and more extreme populist policies. There's a sort of asymmetry here in the way that the politics is judged, which is extreme destabilizing.
That's a very interesting remark, Adrian, and I think it has to be true, but it reinforces my point that the center can hold only so long as the center delivers. When the center lectures the public, why aren't you more rational? Why aren't you more reasonable? Why don't you accept our entire liberal agenda? And then doesn't deliver the basics that is a health service you can trust, a secure border,
and some degree of economic stability. Then the credibility of the center gets punished, and then, as you say, the extremes get rewarded. And that seems to be to capture some of what's going on with our politics.
So I mean, let's just stay in the abstract for a second before looking perhaps if you at your home country of Canada. But before that, is this a problem of maps, which is that we say that the center can hold as long as it delivers, But the problem is delivering. Delivering is now really expensive, and delivering requires with all of the problems facing advanced nations around aging populations and so on, it just requires a lot of money.
In therefore, tax increases, and that is not something that many people vote for.
I think that's certainly true. I live Allegra in Austria, where the center holds because it's basically a high taxation environment that manages to hold its legitimacy because it delivers the trains around time. The health service is pretty good, the education is okay, that you get a kind of balanced equiliverum, high taxation but good public goods. In Britain you appear to have in international comparison, low rates of
taxation and very poor public services. And the whole privatization effort in the nineties seems to have not delivered the service improvements. You have a kind of constantly discontented electorate paying more for less, and that's just pulling the center out of liberal centrist politics.
Can you talk to us about the Canadian situation right now, which is you've got Trudam in power. He's supposed to face an election next year, but it could happen at any point, couldn't it. Michael, just talk to us about that. And apparently he's facing a politician that some people are calling a polite Trump. You may not look.
I think that my successor as leader of the party led the party to a thumping victory in twenty fifteen, I left the party in third place, and he took it to first place and has been in power ever since. But he is now the least popular politician in the country. I think the irony there is that I said at the time he's an actor who fully inhabits the role, which people thought was a very snarky, unkind remark, but actually was meant its praise since I was a poor
actor who didn't inherit the role. I actually intended it his praise. But I think people have got tired of the act. He's always on message, he always sticks the landing, every speaking point is hit, and yet the cumulative effect is of inauthenticity. People simply don't believe it anymore. And so he's in that terrible situation of often saying the
right things, but nobody's listening. And I think at the moment he faces the prospect of defeat, although he would be the last person in Canada to admit it, and believes he will lead the party into the next election and that he will win the next election. I don't quite see how. But one of the great things about political leadership is you sometimes have to believe in yourself when nobody else does, and that's clearly what he's doing.
As for his opponent, he's facing a man that I knew well in the House of Commons, Pierre Polief, who has an extraordinary story. He's from the Midwest of Canada, very poor, difficult childhood. This is enormously in his favor, but he's the downside, and this is a feature of British politics and other politics. He's never done anything other than politics. He's been a staffer since the early twenties. He's learned and attack dog style of politics, taken straight
from the US Republican Party. And when people say he's a small version of Trump, I think he's adopted the entire style of American politics, and it's disturbing that's finding an audience in Canada. But because Canada walks around saying we're a nicer, kinder America, and our national identity survives on invidious comparison with our awful neighbors to this south,
whom we frantically envy but simultaneously despise. But I think we're gonna get possibly a version of Canadian version of Trump in twenty twenty five, and that I think is not good for the country. Because the fact about Canada is that it is this gigantic democracy on tiny population, on a huge landscape. We're so spread out from Atlantic to Pacific to Arctic that the job of a prime minister is basically one thing, keep the show on the road.
And you can't keep the show on the road if you run one section of the country against the other, one group of Canadians against the other. Unity is the only thing a Canadian prime minister has to do. And I fear that Pierre Poliev has forgotten that.
Because Polief's major proposal is axe attacks, which is, get did this forcecoming increase in carbon tax? Do you think that's putting one bit of the population against another.
Well, he's figured out something that is a real issue in liberal democratic politics everywhere, which is that climate change politics is not religion, it's politics. It's highly divisive, and at a time of rising inflationary pressures on people's household incomes the prospect of spending money on a carbon levee on your gasoline is extremely unpopular, and so he's seized on that and hopes to ride his way to power.
But it's symptomatic of a wider problem across liberal democracies is that climate change policies are becoming more and more and more unpopular, and so a liberal politics that cares about climate has got to stick with its convictions. And you know, Trudeau has sacrificed some of his legitimacy by warbbling on carbon tax issues at a time when I think we need to double down.
You've been very pessimistic about liberal democracy during this talk, which I resent a bit normally my job when you've speeds the mantle. But I wonder if there's anything sort of positive that we can think about over the last year or so, and whether there is a chance that we may be seeing that sort of the end of Trump, you know, in the next in the coming election, doesn't
seem to be the leader in this election. Rate Is there any good news that you can see in the past and potentially in the future.
Boy, I'm I'm struggling a bit. Yes, I think liberal democracy is having a very difficult time at the theoretical level. And that's not the right way to answer the question, I know, but let me go there. The reason we should care about liberal democracy, in my view, is that
it's power checking power to keep the people free. One of the things that I think has got lost is we have a liberal democracy in which we have an ever more overpowering state that is ever less competent, so it fills the gap between its power and its actual competence with lecturing the public, and the public is more and more impatient with this, when in fact we need to deliver a liberal politics that really says we care
about your freedom. I don't mean the thatcheri freedom. I mean the freedom that is sustained by just good, decent public goods that we all share. But if you don't have hospitals that care for your mom and dad, if you don't have schools that educate the kids, if the real way is always late, the liberal democratic vision of
freedom sustained by public goods just begins to collapse. And my own view is that it does require a very solid tax space, and that tax space and then is being eroded by accountants to super rich people who basically game the system and drain the treasury the resources we
need to sustain public goods for all. And then we have to say to middle and upper middle class people, folks, if you want a society, if you want a place that holds together as a place you want your kids to grow up, and you got to pay for it. And most liberal politicians, I include myself, are very reluctant to say, if you want public goods, you got to pay for But this is what I think we have to go to.
We have a labor government here that is trying to do exactly what you're saying. But partly because they've handled it very badly, taking a lot of phoebees and all sorts of weird things, they're not getting the message you costs. But also because it's difficult, It takes a long time, and democracies are impatient places.
I wish kir Starmer could listen to Franklin Delano Roosevelt's speeches again, because the thing that old Franklin got right is whenever it's really tough, you can't spend the whole time blaming Herbert Hoover. You can't keep saying there is more darkness before the dawn. You have to say there is nothing to fear, but fear itself will get through this.
You know, the thing that he got better than any liberal democratic politician of the century, last century or this one, is here was a guy who couldn't walk, who made people believe in hope. It's just continually inspiring to me.
And somehow Kure Starmer, who I think is a good politician, serious guy, has overdone the grimness so much that he's forgotten that key function of liberal democratic politics is just to say, there is light at the end of this tunnel, and I am going to get you there and you know, hang on. I think Tony Blair had a bit of that quality, but we badly need somebody who has that magical quality to inspire hope and belief and confidence.
I mean, you're gloomy about the prospects in abstract the political theory of liberal democracy. Is there a country you've talked about Austria where you live now, Is there a country that you think is doing it well and we should be studying more?
Please?
Well? Well, well, Austria is a pretty odd example because it's got a center right government. It could have a far right government at the end of this month. So people listening to me, see what has happened to Ignatiev. He's lost he's lost his mind there in Vienna. Can I think of it? Can I think of a place that's getting it right? It's a little difficult I mean the usual suspects come in here, Finland, Sweden, and Norway.
I think I'm pretty fond of Finland at the moment, partly because it's doing such a good job on two things. It's facing up to the Russians, and b it's investing hugely in education. And I think that's as close as I can think of a society that's succeeding. But all of these places, let's also be the reason people are irritated by the Scandinavian example is if you've had, you know, two hundred years of peace, you know everything's easy. It's
much tougher, and it's much easier if you're small. That's one of the disturbing implications the good countries are all. The bigger you get, the more difficult managing these societies becomes. And so that's a disturbing implication. Small really is beautiful in democratic terms.
Do you think that the corporate world could be doing more to solve these liberal democracy.
Well, I certainly think they could be paying more tax. And I'm please understand me, I'm a liberal. So I believe in capitalism, I believe in markets, I believe in competition, I believe in innovation. But the problem with capitalism is we have so little of it. We have so much oligopoly, we have so much market dominance, and they keep telling us that market dominance is necessary for innovation and growth.
But I think that's been one of the biggest developments of my lifetime has been the steady consolidation of economic power. And then a further more disturbing implication again that frankly, socialists and social democrats have been quicker to see than liberals, which is the stacking of power. Economic power gives you political power. Political power gives you economic power, cultural power, social power stacked on top. The very idea of liberal
democracy is that power is unstacked. That is, if you have economic power, it doesn't translate to political power. If you have political power, it doesn't make you rich. If you have cultural or social power, it doesn't translate into economic or political The unstacking of power is a healthy society. And we have an unhealthy society because power is stacked in a kind of funnel in which everything appears now
to depend on access to political power. The guys in Silicon Valley, the guys at Google, the guys at Microsoft, are tremendously dependent on what could be called regulatory capture. They've got the state by the throat, and this is an enormous, an enormous challenge. And having said that, we have to have a liberalism that understands we want innovation, we want entrepreneurship, we want people sitting in a garage making the next big thing. But God almighty, they've got to pay their way.
I think that's probably as good a big thought as any place to leave it. Thank you very much, Michael, And that was brilliant. Thanks for listening to this week's voton Nomics from Bloomberg. This episode was hosted by me alegra Stratton with Adrian Waldridge. It was produced by Someasadi, production support from Chris Martlu and Isabella Ward. Sound designed by Blake Maples. Brendan Francis Newnham is our executive producer. Sage Bowman is Head of Podcasts and Special thanks to
Michael Ignatief. Please subscribe, rate, and review wherever you listen to podcasts.